CICC Wind Power Equipment 2025 Outlook: Industry Chain Opportunities in the Context of Record High New Installations.

CICC released a research report stating that it is expected that the wind power industry in China will reach a historical high in terms of newly installed capacity by 2025. The newly installed capacity is expected to be more than twice the amount at the end of the previous five-year plan (2020), especially as offshore wind power is expected to significantly end the low construction status of the past 2-3 years. In addition, there is potential for growth in export orders, providing various opportunities for the industry chain under these trends. Key points highlighted by CICC include: - By 2025, it is expected that the newly installed wind power capacity in China will reach 110-120GW, with strong certainty in the high growth of offshore wind power and an upward trend in overseas markets. - Domestic market: The construction of offshore wind projects is accelerating, with strong certainty in the high growth of offshore wind power by 2025. Delayed progress in key offshore wind projects in regions like Jiangsu in 2024 has impacted the industry's newly installed capacity, leading to lower than expected growth compared to the beginning of the year. However, the industry is expected to see a strong growth in the newly installed capacity in 2025 with the start of previously delayed projects and newly tendered projects from the past 2-3 years. The expansion of provincial offshore wind projects in 2024 will continue to contribute to the industry's capacity expansion in newly installed capacity post-2025. The early capacity of offshore wind power in China is key to driving the industry's output increase. - Overseas market: Long-term demand for onshore wind power overseas is steadily increasing, with incremental demand mainly coming from the Asia, Africa, and Middle East markets. Around 2027, the total newly installed capacity of onshore wind power in the Asia-Pacific, Africa, and Middle East regions is expected to almost equal the wind power demand in Europe. According to BNEF forecasts, the CAGR for new onshore wind power installations overseas from 2023 to 2028 is 11.5%. Although there was a lackluster release of overseas orders for offshore wind power in 2024, the long-term trend shows continuous growth in demand. Europe remains the main overseas market for offshore wind power, while markets in Asia-Pacific such as Japan, South Korea, and Vietnam are expected to gradually reach GW-level offshore wind power installation levels from 2028 to 2030. Three major focuses in the Chinese wind power industry in 2025 are as follows: - Expectations for historical high in terms of newly installed capacity in the Chinese wind power industry by 2025, where the newly installed capacity is expected to be more than twice the amount in the previous five-year plan (2025). However, the key to driving the manufacturing output of the domestic wind power industry lies in the flexibility of offshore wind power. Additionally, the overall demand in overseas markets is on the rise, providing continuous opportunities for export growth in the domestic supply chain. The three major focuses in the Chinese wind power industry in 2025 are: 1) Flexibility in domestic offshore wind direction: The sector of offshore cable is entering into a continuous upward cycle in industry orders and deliveries, and the industry is also expected to benefit continuously from the certainty trend of ultra-high-voltage transmission. Additionally, it is expected that the sectors of offshore wind turbine towers and foundation will reverse the pressures on delivery and profits of the past two years as the construction of offshore wind power accelerates, leading to a significant increase in capacity and profits in 2025. 2) Direction of wind power units: The fierce competition in the domestic market for wind power units may have passed its peak, as overseas turbine companies have gradually shifted to higher-priced markets. Domestic wind turbine companies are expected to benefit in the long term from the continuous drive of domestic offshore wind and exports, with the trend leading to a sustained increase in profitability that started in 2024. 3) Export direction of wind power: Priority is given to focusing on 1) the processing fees of overseas offshore wind turbine components have continued to rise, and with the gradual launch of offshore wind projects expected to be connected to the grid between 2027 and 2030, the industry is expected to experience a concentrated period of prosperous order placements; 2) the difference in prices for wind power units in the domestic and overseas markets is widening, with overseas turbine companies focusing on high-priced markets and the increase in demand for onshore wind power in Asia, Africa, and Latin American countries, leading to a continuous growth in new signed offshore wind power unit orders in the domestic market. Risk factors: - Industry demand not meeting expectations. The construction of onshore wind power projects involves multiple approval processes and early preparation work, while offshore wind power projects are affected by various factors such as local waterways, fisheries, and ecology. The previous delays in the progress of onshore and offshore projects may impact the actual pace of newly installed capacity demand if further delays in construction progress occur. - Significant increase in raw material prices. The wind power industry chain has a relatively high proportion of raw material costs, with raw material prices being relatively low in the industry recently. However, due to restrictions on upstream raw material supply expansion, it is possible that if demand increases, raw material prices may rise, thereby putting pressure on the profitability of the components sector. - Intensified industry competition. Most key enterprises in the wind power manufacturing industry chain have taken steps to further expand production. If there is a slowdown in the pace of industry demand for installed capacity in the future, internal competition within the industry chain may intensify, possibly leading to pressure on the profitability of overcapacity enterprises.